The move injects new hope in the Obama administration's attempt to enact the most sweeping reforms since the Great Depression to try to prevent a repeat of the financial crisis.

“For over a year, the Senate Banking Committee has been grappling with how best to address the many problems that led to the financial crisis,” Dodd said in a written statement. "In that time, Sen. Corker has proved to be a serious thinker and a valuable asset to this committee. For that reason, I called him Tuesday night and asked him to negotiate the financial reform bill with me."

Dodd said they met in his office Wednesday night -- a feat in itself given the blizzard that struck the nation's capital -- and that Corker agreed to work on drafting a bill.

[Updated at 12:30 p.m.: "An impasse had been reached, it looked to me like a legislative train wreck was building and I think this is something we need to deal with," Corker said Thursday. "On behalf of our country, surely this is an issue we can solve on a bipartisan basis."]

Dodd has been trying to craft a comprehensive overhaul of the financial regulatory system, a top priority of President Obama. But he knows he needs some Republican support to get a bill through the Senate.

The House passed a major regulatory overhaul in December that, among other things, would create a Consumer Financial Protection Agency and give the government broad new power to seize and dismantle large financial firms if their failure poses a major risk to the economy and to preemptively break up such firms if regulators believe they are too large.

But that bill passed without a single Republican vote.

Corker has a history of working with Democrats. He tried to negotiate legislation in late 2008 to help the U.S. automakers struggling with the financial crisis.

And Corker has been one of handful of Republicans working in tandem with Democrats on the committee to negotiate key portions of the regulatory overhaul. Corker has been teamed with Sen. Mark Warner (D-Va.) on hammering out the details of a new government "resolution authority" that would allow regulators to seize and dismantle teetering firms in an orderly way, similar to how the Federal Deposit Insurance Corp. winds down failing banks.

[Updated at 12:30 p.m.: Corker, who also strongly opposes a standalone consumer agency, said he suggested to Dodd Thursday that they put that issue aside until all the other components of the bill are negotiated. Corker said a compromise could be to beef up consumer protection at the existing regulatory agencies.

"I think this legislation is something that is important, I think it should be done and I hope we’ll figure out a way to get to a bipartisan place," he said.]